By Alana Wise
(Reuters) - Chicago's City Council on Wednesday approved a multibillion-dollar expansion plan for O'Hare International Airport, after an earlier dispute between the airport's two largest carriers had previously threatened to snarl the project.
"We are investing in capacity, technology and modern facilities that will elevate the customer experience and significantly improve operational efficiencies with our historic $8.5 billion expansion plan," Ginger Evans, commissioner of the Chicago Department of Aviation, said in a statement.
The city of Chicago entered into an agreement with carriers United Airlines (N:UAL), American Airlines (O:AAL), Delta Air Lines (N:DAL) and Spirit Airlines (N:SAVE) for airport renovations that include expanding the airport's existing terminals and increasing the number and availability of some gates.
United and American - the airport's two largest airlines - had previously disagreed over the number of gates that would be allocated to each carrier, with American in February accusing United of having engaged in a "last-minute secret deal with the city" to snare additional gates.
Earlier this month, the two resolved the dispute, with Chicago agreeing to speed up construction of three common-use gates that will come into use at roughly the same time United gets five additional gates.
American Airlines and its affiliated carriers accounted for 35.5 percent of passengers at O'Hare in 2016, compared with 44.5 percent for United carriers, according to city data.
"We commend the mayor and his team for reaching an agreement that ensures O'Hare gives Chicago a competitive edge long into the future and provides our great city the world-class airport it deserves," United Chief Executive Oscar Munoz said in a statement.
American also hailed the deal, saying its approval is "what is best for the city of Chicago."
The city on Wednesday also approved an initial $4 billion of airport revenue bonds to help finance the overall project. The bonds are intended to fund portions of the new O'Hare Terminal Area Plan and the Capital Improvement Plan.
The cash will also help refund outstanding bonds in an effort to save money on prior finance deals. JPMorgan (NYSE:JPM), Citibank and Loop Capital Markets are the lead underwriters for selling the debt.
O'Hare is the world's second-busiest airport in terms of take-offs and landings after Atlanta's Hartsfield–Jackson International Airport, according to an Airports Council International 2016 ranking.